Wednesday, October 31, 2007

The following takes place between December 6, 2006 and February 27, 2007.It is my account of the experience, had alongside my co-founder, Walid Al Saqqaf, and other members of our team, of trying to secure the first $1M in seed funding for our company, TrustedPlaces, from HOWZAT media. TrustedPlaces is a user-developed city guide to London, where I live.Dec 6: I wake up at 6:30, for yet another networking event – our fifth in a month that is less than a week old. It is a breakfast session this time. By accident we meet Hugo Burge, of cheapflights.co.uk. He’s a founder, too, and we quickly establish a good rapport talking about what it’s like to start-up a company in London, how some of the presenters at the event started and later “exited,” and also Hugo’s experience growing CheapFlights into a global company. Hugo tells us he is now a co-founder of HOWZAT media LLP., a freshly formed angel fund. TrustedPlaces, happens to be looking for money. We agree to talk further (!), though it’s nothing to get hugely excited about, as a number of previous encounters have taught us.Dec 11: We have our first meeting with Hugo and his partner, David Soskin. We discuss TrustedPlaces in detail, our capital requirements, progress, business plans, etc. We agree on a follow-up meeting.Dec 19: We have a three-hour session with Hugo and David, plus two members of the HOWZAT corporate finance team, Jo and Sascha. We cover more detailed aspects of the business, new product development. We even discuss valuation. I sense things are getting serious. We commit to delivering more detailed plans on the product roadmap and a marketing plan within a couple of days.Dec 21,AM: Walid and I have had to pull an all-nighter to deliver everything on time as we had agreed. I’ve just spent 24 hours refining a business plan we thought was ready, contracts, my CV, everything we need for our corporate presentation for HOWZAT, We thought we had everything in place, but it had been a couple of months since we had looked at those docs. (How things change!)Dec 21, PM: We receive HOWZAT’S first investment offer. It is not the same valuation we had suggested, but still within the limits that we had set. I have warm feeling, but also an awareness that the hard bit has just begun.Dec 22: Receive term sheet. What does “dilution protection” mean again? We go back to the books, hit Wikipedia and Google. [Start looking for lawyers!Dec 25: It’s Christmas. I travel home to Greece. Walid travels home to France, for the holiday.Jan 2: We return to UK and sign the term sheet. We realize we still probably only about 40 percent of the way to getting the deal done. Due diligence has to be done. A lot of things can go wrong from here, but we’re positive and the investors seem positive, too. Some key changes on the TrustedPlaces product are helping traffic, reviews and the user numbers have grown since we first met Hugo. It is a big help.Jan 3: I move house. I receive HOWZAT’s due diligence checklist and their request for a conference call to discuss it. I have to take the call surrounded by piles of boxes.Jan 8: We still have no office at this stage, so we’re all working from home. Dima, our lead engineer has left his old flat, but the work can’t stop. He move in with me. I hand over my room, my bed and my desk while I handle the due diligence Q&A from the living room. I make Dima breakfast, lunch and dinner – it’s 5 Star service! We enjoy a big productivity jump, I suspect because we’re getting all this time to work face to face. Dima and I go for the occasional 15 minute walks to get fresh air and to problem-solve: we work out an algorithm for personalised recommendations to add to our site.Jan 9: We meet three law firms and appoint one of them. The firm is expensive, but has been recommended by a fellow entrepreneur who previously went through a funding round with them, as well as an exit. Also, the partner representing the firm comes across as the smartest. She talks so fast and with such decisiveness, we figure we’ll be able to keep her billable hours low!Jan 10: We spend all day with HOWZAT’s technical consultant for more due diligence. Their guy really likes the way we’re developing our software and gives a thumbs up to the way we manage code, backups, etc. Dima and Moty handle a couple of toughies really well. He asks: ‘How well does your architecture scale?’ They have schematics prepared showing a future architecture, mapped against future traffic and costs. They also have examples of previous implementations that have worked for others. I am proud of them. It is one BIG box ticked.Jan 14: Most of the due diligence has now been covered. Everyone on our team is spent by the huge amount of energy required just to consolidate existing information and produce new documentation of our work product for HOWZAT.Jan 28: We receive a draft investment agreement, amendments to the articles of association, and our new service agreements. We have to hit the books again to look up a few things—the number of new terms seem to increase exponentially with each set of documents. We meet up with our fast-talking lawyer.Feb 1, AM: We launch a new version of our site. It’s a total refresh of the front end, plus a number of new features, like the personalized recommendations. Big exhale, then this: Hugo spots a bug in our search and recommendations feature (it had to be him!). Dima tweaks the algorithm, and tests and redeploys it – within a couple of hours. Even bigger exhale. Early user feedback is very positive and the links are starting to come in.Feb 1, PM: A last minute misunderstanding on a term concerning ownership of the intellectual property adds more “excitement” to what is an otherwise quiet day (;-).We’re supposed finalise all documents tomorrow. We have to schedule a Skype conference with HOWZAT partners for 11PM to avert the crisis.Feb 02: Final meeting goes as planned. We review and discuss all the documents in three-hours. Crisis averted.Feb 04: Full TurstedPlaces team has dinner with HOWZAT media team. It is an equally big part of the deal’s due diligence. It is important to see if we will all get on with each other. The waiters us help us out: they confuse the day menu, twice; then manage to mix up Sascha’s order, three times. Everyone is amused, and relaxed now. We even discuss some obscure cricket rules (Turns out that a “HOWZAT”:http://en.wikipedia.org/wiki/Appeal_%28cricket%29 is a verbal appeal made by a player to an umpire in a cricket match. As in: “_Howzat_ a fair call!?”) Everyone has a great time. Another big box ticked – and they pick up the tab, which is nice!Feb 05: We sign the contract and service agreements. Fantastic, but we still have not closed. Although we have agreed on everything, HOWZAT’s investment fund members still have to approve the transaction. It is a nervous waiting period, but a good opportunity to focus on the product and enjoy a bit of sport, for a change.Feb 23: Three long weeks later (!) we receive word that HOWZAT’s board has approved the investment. Still more days of nervous waiting. No deal is “done” until the money appears.Feb 27: Biggest bank account balance I’ve ever seen. We’ve done it! Time to celebrate. Mini pub crawl and dinner at Asakusa, my favourite Japanese spot in London. I can pick up the tab this time!So that was it — 83 days from start to finish. It was the first time any of us at TrustedPlaces had raised such an amount, and it happened much faster than what we had expected. Then again, it took nine months of hard work to lead us to the day when we first met Hugo. The pressure was very high at times, but we got lucking with good timing on a number of occasions. And we had some great people working with us on both sides. We had done it! The lessons we learned were many. Here are my top three:*1) Don’t underestimate the effort you’ll have to put behind due diligence. Prepare for it.2) Find people you trust (like a fast-talking lawyer) to usher you through the process. This is critical.3) Help yourself by reading up on legal and corporate terminology before you even begin to try and raise funds.*

This is a book that a I read a few months ago, it is an interesting insite into the minds of the early stage entreprenure, it is a good read if you are just starting out with your new adventure.

These are some nugets form the book, but there are plenty more to be found in it:

Sabeer Bhatia (Hotmail) on how he decided whether to tell venture capitalists the real idea he wanted to get funded. “If they passed the litmus test of not rejecting us for the wrong reasons and said, ‘OK, we don’t mind that you’re young, we don’t mind that you don’t have management experience, only when they would start poking holes in the actual idea would we share the Hotmail idea with them.”Woz (Apple). “All the best things I did at Apple came from (a) not having money, and (b) not having done it before, ever.”Mitch Kapor (Lotus Development) on how much money he asked for from Sevin-Rosen. “I think I said probably $2 to $3 million. We had nothing. We hand an early-stage under-development spreadsheet, and me and Jon Sachs. So that was the biggest number I felt I could ask for without being totally absurd.”Evan Williams (Blogger.com) on how he raised money to buy more servers. “We posted it on our website, and it said, ‘Hey, we know Blogger is really slow. It’s because we need more hardware. We don’t have the money to buy it, so give us money, and we will buy more hardware and we’ll make Blogger faster.’”Tim Brady (Yahoo!). “The funniest thing I can remember was when there was a huge storm in May of ‘95, and the power grid went down for a few days. We had to go rent a power generator and take turns filling it with diesel fuel for 4 days. 24/7. We were laughing, ‘How many pages to the gallon today?’”Mike Lazaridis (Research in Motion) on the importance of recruiting students. “’…What’s important to me are the signs on the back of the building.’ Of course, everyone recoiled from that. I explained to them, ‘I don’t really care if anyone else knows where the building is. All I want is the students to know where the building is.’”Mike Ramsay (Tivo): “I remember one weekend, we took the entire company, what was about 60 people at the time, and we divvied them up and went to all the Fry’s stores in the Bay Area, because they were selling at Fry’s. We set up demo stations and the employees were giving demos. It was great because almost everybody had no experience of what it’s really like to sell in a retail store.”Paul Graham (Viaweb): “Neither of us knew how to write Windows software, and we didn’t want to learn. It seemed like this huge steaming turd that was best avoided. So the main thing we thought when we first had the idea of doing web-based applications was, ‘Thank God we don’t have to write software on Windows.’”On raising money: “The advice I would give is to avoid it. I would say spend as little as you can because every dollar of the investors’ money you get will be taken out of your ass…”Catarina Fake (Flickr): “So Flickr started off as a feature. It wasn’t really a product. It was kind of IM in which you could drag and drop photos onto people’s desktops and show them what you were looking at.”Brewster Kahle (Thinking Machines): “The blessing of Thinking Machines and the curse of Thinking Machines was that it had a lot of money. If you have a lot of money, then you can be detached from people that are going to pay you in the future.”Chuck Geshke (Adobe) on the reaction of the spouses of Xerox execs to a demonstration of PARC technology in 1977: “They loved this stuff. They sat down and played with the mouse, they changed a few things on the screen, they hit the print button and it looked the same on paper as it did on the screen. They said, ‘Wow, this is really cool. This would really change an office if it had this technology.’”[This is why you should always listen to your wife. And if you’re a woman, you should never listen to your husband.]Ann Winblad (Open Systems). “So I get in front of these 60 or 70 guys and these guys are probably all in their 50s and I’m in my 20s, and we had a ‘blue light special,’ where we said, ‘If you give me a check today for $10,000, you can have unlimited rights to one of our modules.’ …I went home with, I think, like 12 or 15 of these $10,000 checks in my purse.”James Hong (Hot or Not) on his first beta site. “My dad was the first person that ever saw Hot or Not besides Jim and me, and he got addicted to it! Here’s my dad, a 60-year-old retired Chinese guy who, as my father, is supposed to be asexual, and he’s saying, ‘She’s hot. This one’s not hot at all.’” On using his parents to moderate the pictures: “I originally had my parents moderating since they were retired, and after a few days I asked my dad how it was going. He said, ‘Oh, it’s really interesting. Mom saw a picture of a guy and a girl and another girl and they were doing…’ So I told Jim, ‘Dude, my parents can’t do this any more. They’re looking at porn all day.’”On his newfound dating success with hot women: “All of a sudden Hot or Not happened, and I was starting to date all these attractive women. I got a taste of it, and I realized that looks don’t make up for a good personality. Many of these girls were annoying. They were fun to hang out with, but I couldn’t have a conversation with them.”[IMHO, James is the funniest person in the book.]James Currier (Tickle). “When we started the company, we wanted to change the world, and we had all these tests on the site to help people with their lives. We had the anxiety test, the parenting, relationship, and communications tests. And no one came. …’Let’s do a test for what kind of breed of dog you are.’ …We put it online and 8 days later we had a million people trying to enter our site.”Mena Trott (Six Apart) on early meetings with the current CEO of the company, Barak Berkowitz. “Barak said, ‘That’s great for a niche or personal lifestyle business, but we’re not interested in investing in that.’ At first we thought, ‘Who is this asshole? Why is he saying that to us?

Sunday, October 28, 2007

I am away to the smokey city to try and help raise some cash for the business over the next couple of days, we are ptiching at the Connect Investors Conference, I have been there before,but not for a few years though. The last time was pitching my own company with a friend of mine Callum Norrie, it was a technology venture, we ran it for a year, and then moved on, this time we will be pitching for real money, with a strong pitch and and a good story. I read a short dialogue and thought it would be very apt for Monday morning, see below

Friday, October 26, 2007

The master in the art of living makes little distinction between his work and his play, his labor and his leisure, his mind and his body, his information and his recreation, his love and his religion. He hardly knows which is which. He simply pursues his vision of excellence at whatever he does, leaving others to decide whether he is working or playing. To him he's always doing both. -James A. Michener.

We should take care not to make the intellect our god; it has, of course, powerful muscles, but no personality.--Albert Einstein

Beware of Garbage Trucks By David J. Pollay

How often do you let other people's nonsense change your mood? Do you let a bad driver, rude waiter, curt boss, or an insensitive colleague ruin your day? Unless you're a robot, you are bound to blow your top off. However, the mark of a sucessful person is how quickly he or she can get back his or her focus on what's important. Sixteen years ago, I learned this lesson. I learn it in the back of a New York City taxi cab. Here's what happen.

I hopped in a taxi, and we took off for Grand Central Station. We were driving in the right lane when, all of a sudden, a black car jumped out of a parking space right in front of us. My taxi driver slammed on his brakes, skidded, and missed the other car's back end by just inches! The driver of the other car, the guy who almost caused a big accident, whipped his head around and he started yelling bad words at us. My taxi driver just smiled and waved at the guy. And I mean he was really friendly. So, I said, "Why did you do that? This guy almost ruined your car and sent us to the hospital!" And this is when my taxi driver told me what I now called, 'The Law of the Garbage Truck'. Many people are like garbage trucks. They run around full of garbage, full of f rustration, full of anger, and full of disappointment. As their garbage piles up, they need a place to dump it. If they happen to dump it on you, don't take it personally. You just smile, wave, wish them well, and moved on. You'll be happier if you did that rather than fight them.

So this was it: 'The Law of the Garbage Truck'. I started thinking, how often do I let garbage trucks run right over me? And how often do I take their garbage and spread it to other people: at work, at home, on the street? It was that day I said, "I'm not going to do it anymore." I see garbage trucks everywhere and everyday. I see the load they're carrying. I see them coming to drop it off. And like my taxi driver, I don't make it a personal thing; I just smile, wave, wish them well, and I move on. Good leaders know they have to be ready for their next meeting. Good parents know they have to welcome their kids home from school with hugs and kisses. Teachers and parents know that they have to be fully present and at their best for the people they care about. The bottom line is that successful people do not let garbage trucks take over their day.

What about you? What would happen in your life, starting today, if you let more garbage trucks pass you by? Here's my bet. You'll be happier. So ... love the people who treat you right. Forget about the ones who don't. Believe that every thing happens for a reason.

If you get a chance, TAKE IT!

If it changes your life, LET IT!

Nobody said it would be easy .... They just promised it would be WORTH IT

Thursday, October 25, 2007

It is interesting to explore the views of others on leaderhip, my personal belief, is that leadership is unique to a person, how they lead is part of themselves, great military leaders, are great beacuse they were different, they had evloved from the military indoctrination, the same in large corporations, the great leaders in Industry, are differnent unique, as a leader in a start up you need to find your own balance of leadership, over the next few posts I will try to give some material to help you, understand more about you and your leadership styles.

Two factorsMany scholars assumed that there was one best style of leadership, Fiedler’s contingency model postulates that the leader’s effectiveness is based on ‘situational contingency’, that is a result of interaction of two factors, known as 'leadership style' and 'situational favourableness' (later called situational control). More than 400 studies have since investigated this relationship.Least preferred co-worker (LPC)The leadership style is the consistent system of interactions that takes place between a leader and work group. According to Fiedler this depends on the personality of the leader, thus, fixed and measured by –what he calls- the least preferred co-worker (LPC) scale, an instrument for measuring an individual’s leadership orientation. The LPC scale asks a leader to think of all the persons with whom he or she has ever worked, and then to describe the one person with whom he or she worked the least well with. From a scale of 1 through 8, the leader is asked to describe this person on a series of bipolar scales such as those shown below: Unfriendly 1 2 3 4 5 6 7 8 Friendly Uncooperative 1 2 3 4 5 6 7 8 Cooperative Hostile 1 2 3 4 5 6 7 8 Supportive Guarded 1 2 3 4 5 6 7 8 Open

The responses to these scales (usually 18-25 in total) are summed and averaged: a high LPC score suggests that the leader has a human relations orientation, while a low LPC score indicates a task orientation. Fiedler assumes that everybody's least preferred coworker in fact is on average about equally unpleasant. But people who are indeed relationship motivated, tend to describe their least preferred coworkers in a more positive manner, e.g., more pleasant and more efficient. Therefore, they receive higher LPC scores. People who are task motivated, on the other hand, tend to rate their least preferred coworkers in a more negative manner. Therefore, they receive lower LPC scores. So, the Least Preferred Coworker (LPC) scale is actually not about the least preferred worker at all, instead, it is about the person who takes the test; it is about that person's motivation type. This is so, because, individuals who rate their least preferred coworker in relatively favorable light on these scales derive satisfaction out of interpersonal relationship, and those who rate the coworker in a relatively unfavorable light get satisfaction out of successful task performance. This method reveals an individual's emotional reaction to people with whom he or she cannot work. Critics point out that this is not always an accurate measurement of leadership effectiveness.Situational favourablenessAccording to Fiedler, there is no ideal leader. Both low-LPC (task-oriented) and high-LPC (relationship-oriented) leaders can be effective if their leadership orientation fits the situation. The contingency theory allows for predicting the characteristics of the appropriate situations for effectiveness. Three situational components determine the favourableness or situational control:Leader-Member Relations, referring to the degree of mutual trust, respect and confidence between the leader and the subordinates.Task Structure, referring to the degree to which the task at hand is low in multiplicity and high in verifiability, specificity, and clarity.Leader Position Power, referring to the power inherent in the leader's position itself.When there is a good leader-member relation, a highly structured task, and high leader position power, the situation is considered a "favorable situation." Fiedler found that low-LPC leaders are more effective in extremely favourable or unfavourable situations, whereas high-LPC leaders perform best in situations with intermediate favourability.Leader-Situation Match and MismatchSince personality is relatively stable, the contingency model suggests that improving effectiveness requires changing the situation to fit the leader. This is called "job engineering." The organization or the leader may increase or decrease task structure and position power, also training and group development may improve leader-member relations. In his 1976 book Improving Leadership Effectiveness: The Leader Match Concept Fiedler (with Martin Chemers and Linda Mahar) offers a self paced leadership training programme designed to help leaders alter the favourableness of the situation, or situational control.ExamplesTask-oriented leadership would be advisable in natural disaster, like a flood or fire. In an uncertain situation the leader-member relations are usually poor, the task is unstructured, and the position power is weak. The one who emerges as a leader to direct the group's activity usually does not know any of his or her subordinates personally. The task-oriented leader who gets things accomplished proves to be the most successful. If the leader is considerate (relationship-oriented), he or she may waste so much time in the disaster, which may lead things to get out of control and lives might get lost.Blue-collar workers generally want to know exactly what they are supposed to do. Therefore it is usually highly structured. The leader's position power is strong if management backs his or her decision. Finally, even though the leader may not be relationship-oriented, leader-member relations may be extremely strong if he or she is able to gain promotions and salary increases for subordinates. Under these situations is the task-oriented style of leadership is preferred over the (considerate) relationship-oriented style.The considerate style of leadership can be appropriate in an environment, when the situation is moderately favorable or certain. For example, when (1) leader-member relations are good, (2) the task is unstructured, and (3) position power is weak. Situations like this exists with research scientists, who do not like superiors to structure the task for them. They prefer to follow their own creative leads in order to solve problems. In a situation like this a considerate style of leadership is preferred over the task-orientedOpposing viewsResearchers often find that Fiedler's contingency theory falls short on flexibility.They also noticed that LPC scores can fail to reflect the personality traits it is supposed to reflect.Fiedler’s contingency theory has drawn criticism because it implies that the only alternative for an unalterable mismatch between leader orientation and an unfavourable situation is changing the leader.The model’s validity has also been disputed, despite many supportive tests (Bass 1990).Other criticisms concern the methodology of measuring leadership style through the LPC inventory and the nature of the supporting evidence (Ashour 1973; Schriesheim and Kerr 1977a, 1977b; Vecchio 1977, 1983). Fiedler and his associates have provided decades of research to support and refine the contingency theory.Cognitive resource theory (CRT) modifies Fiedler’s basic contingency model by adding traits of the leader (Fiedler and Garcia 1987). CRT tries to identify the conditions under which leaders and group members will use their intellectual resources, skills and knowledge effectively. While it has been generally assumed that more intelligent and more experienced leaders will perform better than those with less intelligence and experience, this assumption is not supported by Fiedler’s research.SummaryTo Fiedler, stress is a key determinant of leader effectiveness (Fiedler and Garcia 1987; Fiedler et al. 1994), and a distinction is made between stress related to the leader’s superior, and stress related to subordinates or the situation itself. In stressful situations, leaders dwell on the stressful relations with others and cannot focus their intellectual abilities on the job. Thus, intelligence is more effective and used more often in stress-free situations. Fiedler has found that experience impairs performance in low-stress conditions but contributes to performance under high-stress conditions. As with other situational factors, for stressful situations Fiedler recommends altering or engineering the leadership situation to capitalize on the leader’s strengths. Despite all the criticism, Fiedler's contingency theory is an important theory because it established a brand new perspective for the study of leadership. Many approaches after Fiedler's theory have adopted the contingency perspective.

Wednesday, October 24, 2007

The Formula for Sustainable Success in Life, Leadership and Work- VPPVG

Vision: The external stuff. Sometimes our vision is clouded by the desires of others, sometimes our vision is clouded by false core beliefs that are the reflection of things we were told to believe about life, about work, about ourselves. But, the truth is that we cannot start to WIN the race with wolves, we cannot start to really create a roadmap that will help us engage our potential to achieve greater success and fulfillment in our lives and our work with out a clear vision of what we really seek. And, this clear vision cannot be the vision of those who love us, those who mentor us, those we work for, our parents, teachers, authority figures, spouses or partners. A clear vision is our own personal vision of what we truly want to achieve in life and work.Purpose: The internal and eternal flame.It is a known fact that most people spend more time deciding on which movies to go to than really thinking about their life purpose. Your purpose counts, my purpose counts and when we lose sight of our purpose we lose our anchor. And, if we do not tap into our purpose we float. Floating can be okay, we can even float to success. But, floating never allows ones to really live life with true and sustainable gusto, it never allows that feeling of true peace of mind, self love or satisfaction because we are floating waiting to see which way the current will turn, searching for an anchor that is not our own.

Passion: Ah, yes the flame behind your true purpose. The things that you do that really make you feel at one with the universe, enabled, empowered, engaged, valuable. Passion drives our best thoughts, best actions, best leadership, best work, and best relationships. After our survival needs have been met, all human beings share the desire to feel valued, loved worthwhile. It is this desire, and our intrinsic strengths, talents and spiritual strength that create positive passion. Finding out what our true passion is, determining what it is that makes us feel valued, loved, worthwhile in our lives and work is important, if not critical.

Values: We all have values that help form our map of the world. Values that tell us what is right, what is wrong. Values that determine how we speak, act and the boundaries we set up in our interactions and relationships with others. When our core values our out of sync we feel is disconnection with our true self. When you values are not lived in our relationships and in our work there is a conflict that is growing. The lives we lead, the relationship we build, the work we do must be in alignment with our values. And, if it is not we will never achieve the success and happiness we seek because this misalignment of values will create an inner conflict that insidiously threatens, erodes or destroys our passion, purpose and potential.

Goals: Not rocket science, but most of us are so busy, so caught up in what we need to do, should do, and have to do that we forget about our goals. While many of us have read that people who set their goals, people who write down their goals are more likely to achieve them, actually taking the time to do this requires commitment and effort. And, in the heat of arguments, or when we are under stress our true goals and objectives can almost disappear from our consciousness. In the daily bump and grind of life and career it takes discipline and practice to really reflect upon our true goals. Goals that you need to embrace, read/tell to yourself and internalize on a regular basis so that they become real. Goals that reflect: Your vision, purpose, passion and values.

How you start to engage your VPPVG? The first place is with desire. No one can do it for you. Once you have the desire, the opportunity to find a coach, professional or friend who will help you really understand and engage VPPVG will present itself. The second place is fighting the fear factor. Yes, we all have an innate fear of change, many of us are uncomfortable asking for help. And, sometimes making a decision, even a positive decision to win the war with wolves is scary, and our fear factor can keep us stuck in stasis The third place is moving from thinking to doing.The best laid plans of mice and men are irrelevant if our ideas, our thoughts, our desires are not actualized. Having the desire to win the race with wolves by developing you VPPVG is the start, but taking making this desire actionable is the solution.

Tuesday, October 23, 2007

When a competitor raises a round of venture capital, how should you react? We discuss a scenario in which your competition raises a massive venture capital funding round.Your competitor just raised $50 million. Time to panic, right?

Not necessarily.When your competitors raise considerably more money than you, there's a silver lining in that cloud.Here's our take on what it means to be outfunded by the competition.The bottomline? You can take a competitor's capital raise as good news and bad news – here's why.The Good News: Looking on the Bright SideYou're Business Model Just Received Some Serious ValidationWhen a venture capital firm or strategic investor invests in one of your competitors, it confirms that outsiders think you are on to something. While it's true that they didn't invest in you, it still shows they have some faith and interest in what you are doing. That's a better situation to be in than having, say, five competitors and nobody in the group can raise any money because not a single investor believes in the opportunity you are all chasing after.It's Going to Be Easier for You to Raise Money NowOnce one company in a group of competitors receives funding, it often -- not always, mind you – we'll get to that later -- becomes much easier for everybody else in the group to raise money. As mentioned above, your sector has been validated by the first group of investors. This gets other investor groups interested in the sector. For example, if Kleiner Perkins just jumped into the sector, the other investors will take it as a sign that the sector is worth investing in. Many investors are lemmings and will follow the leaders. So, once a competitor gets funded, it's very common that other investor groups will start calling you. Assuming you want to raise money, that's a good thing.You May Get Some Acquisition InterestAcquirers often take interest in funding rounds too. When one company in a competitive group gets a big funding round, it's fairly common for one to two others in the group to get acquired six months later. Once the business model is validated by a large investment in one of your peers, there's a realization that there they may be some value in acquiring similar firms. An investment round naturally increases the sale price, so there may be a desire to acquire your company before you do your round and increase your price. If the price is right, that's a good thing – and it was all triggered by your competitor's closing a big funding round. Even if acquisition interest is a few years off, you'll be in better shape when suitors come around than your funded competitor; they'll have to hold out for a high price to please investors, while you, on the other hand, can price your company much more attractively.The Pressure Is On…For Your Funded CompetitorBelieve it or not, getting a big funding round isn't always a good thing. Your competitor who got funding now has a lot of external scrutiny on every move they make. You, on the other hand, are still carefree and nimble, able to make your own decisions. There's a good chance they'll spend the money foolishly, ramping up on unnecessary – and unnecessarily expensive – staff, as well as overspending a boatload of money on marketing. That's what (dumb) companies do when they close a funding round. VC-funded firms often follow a common game plan that doesn't guarantee success and can, in many cases, make failure more likely.Your Competitor Will Do Your Marketing For YouI've been in exactly your position, and one of the best things about competitors getting funding is that they tend to spend a lot on evangelizing the market. At first, when you see their full-page color ads in the trade magazines and their big and impressive trade show booth, you might think: Oh no, they're using that VC money to outmarket us! But the reality is that there is a trickle-down effect to their marketing dollars that helps you out, especially if you are in a new marketplace where demand isn't strong yet. Let them spend money to educate the market, and then deliver a better product to customers they'd love to have.A Funding Round Can Be a Signal of WeaknessIf you're cash flow positive and your business is growing as you’d like it to, rest a little easier. Your competitor may have raised money because they had no other option. Indeed, some companies raise money because running the business profitably isn't something they've figured out. Rather, than improve fundamentals to get to positive cash flow, they run to the VCs, tell a big story, and get money in the bank. If they keep running in the red, that money will eventually be gone. It's water under the dam, as they say. Long story short, a competitor receiving VC funding doesn't necessarily mean they are doing well. Rather, it can be a sign of weakness..The Bad News: Maybe It Is Time to PanicOK, if you've read up to this point (and thanks for sticking with me this far, by the way!), you may be feeling much better about your competitor's having raised $50 million or whatever they raised.Don't feel better. While there's some merit to what we've said above, this is mostly just spin – it's making lemonade when life deals you lemons.If you are the CEO and your competitors just raised funding, use the arguments above in a pep talk to boost the morale of your demoralized employees. Most will buy it – and like we said there's some merit to the arguments made above.But let's be realistic. There are more than a few good reasons to panic when a competitor raises a ton of money.

Bad News – Competitors Have Raised a Bunch of MoneyHere are a bunch of reasons why a competitor's raising funding should not be taken lightly.Their Product Development Will Leave You in the DustPerhaps you've got a better offering than the competitor. Maybe you are at parity. Regardless of where you are right now, prepare to be left in the dust. With their newly acquired venture money, the competitor will hire talented engineers and product development staff. They'll kick into high gear while you stay at low gear. With a better product, they'll capture more market share and you will experience a slow and painful fall to mediocrity.They Will Speed Past You in Marketing and Sales CapabilityMarketing dollars are wasted in some markets, but in others strong brand recognition and great marketing can lock up the market. If your competitor just raised money, think about whether increased investment in marketing on their part will put your company at risk. If so, you may need to raise money yourself in order to stay competitive. The same thought process applies to sales. Even if you've got a better process, you'll lose deals if they've got a better sales force.They May No Longer Care About ProfitabilityWhen a competitor raises a large venture round, profitability may no longer be a top priority for them. They may offer huge discounts to prospects just to buy business – as a result, prospective customers will go with them, rather than you. They will lower prices just to put you out of business, and with money in the bank, they can afford to do it.They Got the Stamp of Approval, and You Didn'tSome markets only have one winner – and sometimes that's not true but everybody thinks it is. Once one company in a given space gets a big venture round, there's a decent chance that other investors won't act like lemmings but will instead do the opposite. The logic goes like this: Hmmmm, if Kleiner Perkins is putting a ton of money into Company B, that company must be really good. They're sure to dominate the market, so we should steer clear of this space. Long story short, your competitor's getting a venture round may preclude your getting any funding at all.This Might Mean You Have an Achilles' HealYou can be the best founder and CEO in the world, with great engineers, great marketers and a great sales staff. But are you any good at raising money? If your competitor raises money, it's time to assess how good you are at doing the same. If bootstrapping is your strategy, no worries. But if you've been trying to raise money and haven't, the maybe it's time to bring in a new management team member who can raise money. Clearly, your competitor is better at fundraising than you are, since they were able to close their round. You need to recognize your weakness and take action appropriately.The Bottom Line?If your competitor raised money recently, it can be a good thing or a bad thing – or both for that matter. Your mileage may vary, as they say.But, too be sure, many companies that have a lot of funding have been handily defeated by competitors with little or no venture funding.When competitors raise money, you don't have to raise money too – but, without a doubt, you do have to raise your game to a higher level.

From the blog by http://www.gaebler.com/ Gaebler Ventures, established in 1999, is a business incubator, holding company, and venture capital fund based in Chicago, Illinois.

Monday, October 22, 2007

The Anxiety of Waiting to be SuccessfulBecoming successful is a stressful process.Aside from the trials and tribulations of building a company we often create an entirely separate bucket of anxieties just worrying about our own career paths.We worry that we're not already successful enough. We worry that we're not growing as quickly as our peers are. We worry that if we can't take our company public like that twenty-something kid did, we're just not worthy.All of this anxiety is not only self-imposed, it's largely self-destructive.While being driven to achieve, succeed and win can send us to great heights, they can also distract and demoralize us from actually becoming successful.There are a few techniques that can help you transform that useless anxiety into very practical energy to help move you and your company forward.Make Successful MilestonesSuccess rarely happens as one incredible moment where the skies part, the rays of brilliance shine down, and a harmonious choir sings your name a cappella.Success isn't a destination, it's a series of successful milestones that leads to a destination. Instead of worrying about where you'll be in ten years, worry about where you'll be in ten days, or ten weeks. For example, let's say that you wanted to build a company to $100 million in sales. Instead of worrying about getting to $100 million, you need to be laser focused on getting to $1 million. While the $100 million goal is nice, it's a distraction until you get to your $1 million goal as quickly as possible.The milestones along the path to success are not incidental. They aren't simple road markers that just happen to remind you that you are heading in the right direction. Every one of those milestones is success, and as of today, those milestones are the only thing that should matter.Don't CompareAnother mistake is comparing your performance and path to success to someone else's. If you read enough biographies of successful entrepreneurs, you'll learn one commonality no one knew that their path would end up where it did.Bill Gates didn't know that creating a computer operating system would lead to the largest computer software company in the world. Richard Branson didn't know that signing Boy George and Phil Collins would make Virgin the music label that it became. Their incredible success at an early age had nothing to do with comparing themselves with the progress of others it had to do with their focus on their own progress and timelines.Driving yourself to beat others and their progress is a useless feat. At it's core it's disingenuous what someone else does should not dictate your path. Beyond that, it's just a waste of valuable time and attention.Instead of comparing your career to someone else's', compare your progress against your own commitments. Whether or not you made more money than the Google guys by your early 30's isn't the point. Whether you left the office this week without creating more value than last week is definitely the point.Avoid Arbitrary DeadlinesIn some cases we create a pre-conceived notion of when in our lives we should be successful. We assign arbitrary milestones like by age 30 or by the time I retire or before my dad did it in his career to our success goals.That's like Barry Bonds saying that he's going to hit his record breaking home run on the 7th day of August against the Washington Nationals. He couldn't possibly know when that moment was going to arrive until it was practically there.No, Bonds just kept swinging for the fences until enough balls went out of the park.Creating deadlines for success is largely a wasted process. Nothing magical happens when you turn 30 (I know, I tried it) and nothing you do more quickly than your old man will make your life any better.Your career timeline is your own, and no one else's path should have any bearing on yours. If you really want to kick butt, set a record that someone else will have to worry about breaking by some point in their life. Mark your territory with your own accomplishments, not the retraction of someone else's.Get FocusedLook, you can drive yourself insane trying to beat everyone else and still wind up nowhere.Or you can put on blinders and have complete tunnel vision on your own success. Think of every moment that you spend worrying about what someone else has done, or whether you've achieved enough by some arbitrary date as a step backward.Instead, use those moments of negative self-reflection as a time to think of something that you can get accomplished. If you can manage to stay positively focused on the path ahead, you won't have to worry about when you'll be successful or how. That part will take care of itself.

Friday, October 19, 2007

This is from the one of the big 4 consultants, I have worked with a few of these guys and they are interesting, but in all of the tools I have posted on,the bottom line is execution, at the correct time, McKinsey 7S Framework is a framework that is used to solve organizational problems and strategy implementation.

The framework consists of the following elements:

StrategyStructureSystemsStaffSkillsStyle

Superordinate Goals (Shared value)

Explanation

Shared Value: The interconnecting center of McKinsey's model is: Shared Values. What does the organization stands for and what it believes in. Central beliefs and attitudes.Strategy Plans for the allocation of a firms scarce resources, over time, to reach identified goals. Environment, competition, customers.

Structure The way the organization's units relate to each other: centralized, functional divisions (top-down); decentralized (the trend in larger organizations); matrix, network, holding, etc.System The procedures, processes and routines that characterize how important work is to be done: financial systems; hiring, promotion and performance appraisal systems; information systems.Staff Numbers and types of personnel within the organization.Style Cultural style of the organization and how key managers behave in achieving the organization’s goals.Skill Distinctive capabilities of personnel or of the organization as a whole.Strategy ImplementationThe value of the 7S framework is that it can be used for "judging the doability of strategies." When new strategies are being implemented, the manager should examine and coordinate these seven elements, such that all elements can work together instead of being a burden of strategy

Thursday, October 18, 2007

There has been a lot of talk w.r.t Change management, it has been dressed up by consultants in many guises, but this is the most effective method I have used to understand the issues and prepare an action plan to effect a change in behaviour culture, or to see what the impact of a change in the culture that you plan can be, who it effects and how to plan for the resistance of the proposed changes.

Force field analysis is one of the most influential developments in the field of social science. It provides a framework for looking at the factors (forces) that influence a situation, originally social situations. It looks at forces that are either driving movement toward a goal (helping forces) or blocking movement toward a goal (hindering forces). The principle, developed by Kurt Lewin, is a significant contribution to the fields of social science, psychology, social psychology, organizational development, process management, and change management.Lewin, a social psychologist, believed the "field" to be a Gestalt psychological environment existing in an individual's (or in the collective group) mind at a certain point in time that can be mathematically described in a topological constellation of constructs. The "field" is very dynamic, changing with time and experience. When fully constructed, an individual's "field" (Lewin used the term "life space") describes that person's motives, values, needs, moods, goals, anxieties, and ideals.Lewin believed that changes of an individual's "life space" depend upon that individual's internalization of external stimuli (from the physical and social world) into the "life space." Although Lewin did not use the word "experiential," (see experiential learning) he nonetheless believed that interaction (experience) of the "life space" with "external stimuli" (at what he calls the "boundary zone") were important for development (or regression). For Lewin, development (or regression) of an individual occurs when their "life space" has a "boundary zone" experience with external stimuli. Note, it is not merely the experience that causes change in the "life space," but the acceptance (internalization) of external stimuli.Lewin took these same principles and applied them to the analysis of group conflict, learning, adolescence, hatred, morale, German society, etc. This approach allowed him to break down common misconceptions of these social phenomena, and to determine their basic elemental constructs. He used theory, mathematics, and common sense to define a force field, and hence to determine the causes of human and group behavior.

Wednesday, October 17, 2007

I picked this blog article up from my feed from Ask the Wizard's blog,

http://www.burningdoor.com/, it vindicates my thought and teaching process with regards to how new companies need to be structured in the early days and moving forward, in any company you need to get things done!!! that takes an operations guy to set up and manage. The following article by Dick Costolo who fires up his virtual pen and lets the words flow, it is an excellent treatise on who to hire early in the life of your company.

Too Many Chiefs or Too Many IndiansBy Dick CostoloA wizard follower (I call them followers now; this is how one builds one’s own cult) writes to ask: We’re growing the business from four people to twenty, and in our current structure, everybody reports to me. That’s obviously untenable long-term. What’s the best way to grow organizationally so that the company is structurally prepared for 20/30/40 employees?It’s hard enough to find great people, and hoping that you will find both great people and a consistenly smooth balance of experience across departments is almost impossible. What’s the right way to address this and how do you attack the problem?I once heard serial entrepreneur Mike Cassidy (most recently founder/CEO of Xfire) tell a large group of CEO’s that given a choice in the early days between hiring very experienced senior people or extremely enthusiastic and energetic junior people, he always looks to hire experience. I agree with this, and I’ll discuss why. First of all, in the first year to eighteen months of the business, everybody is generally heads down and go, go, go. By bringing in experienced people who understand the industry, their roles, and what needs to get done, you as entrepreneur are less likely to have to play grown-up and deal with the management issues that can frequently pop-up among a largely junior staff. It’s critical in the first 12-18 months to run as fast as possible, and by bringing in experienced players that can hit the ground running, you give yourself an opportunity to get a lot accomplished quickly. Secondly, as the organization grows from 4 to 20, if your first few people are senior, you can be confident that the future leaders of your organization are do-ers, people who rolled up their sleeves in the early life of the business and know how things operate ‘under the hood’. We never liked to bring in people to run a part of the organization if we were unsure of how hands-on they could be. You don’t have this problem if the senior people are doing all the heavy lifting themselves in the early life of the business. Finally, once you’re at 4 or 5 people and you need to start ramping staff more quickly, if your first few people were experienced people, you can feel comfortable hiring either experienced or junior people as employees 5-10, but if your first few hires are inexperienced juniors that look to you for lots of management help, your next several hires have to start including a couple key senior people with great experience, just when you’re in the mode where you need to hire more aggressively and it’s going to be harder to find those key people quickly without some serendipity.Ok, so if you’re at a couple people right now and you’re just getting ready to grow, you’ve got my advice….your next hires should include a couple experienced players who can fill key roles as you grow. They have to be do-ers, not people who are just waiting to manage the next people that come in. What if, on the other hand, you’ve already hired your first five people, they’re all junior engineers or designers or customer service, and everybody reports to you? Now what? Here’s what I think I’d do if I were in that position (warning: conjecture ahead!). I’d try to hire somebody with significant experience in your product or service area that can play an operations executive role as the company grows. Even if this person will report to you and everybody else will still initially report to you, as you grow to 20 people, an operations executive that could ultimately grow into a senior management role will give you some flexibility in your next set of hires. For example, as you grow, you’ll obviously need to start offloading some of the tasks you’ve been handling as founding entrepreneur. If you’re growing and your first experienced hire is CTO, you’ve got no room to move on the finance, business development, legal, HR side of the house and you will still have to manage all of that yourself. You probably shouldn’t expect the CTO to be able to handle payroll while you’re out visiting that customer next week. Same thing for vp finance or the like. You can’t expect them to facilitate a product development meeting with the junior team members while you go meet with VC’s. What do I mean by an “operations executive”? I’m not saying you should try to recruit the COO of Dell. I’m speaking more about somebody who’s run a large product or service team and had to deal with things like budgets and forecasts, project management, product development, etc. If they've got actual operations executive experience, swell. By positioning the potential role as providing a path toward senior management in the company, you will hopefully attract well qualified experienced people who are looking for an opportunity to take a big step forward to the next level in their careers.In fact, the first senior hire start-ups usually bring in is a VP, Business Development. You are eager to get out there and do business, you’ve got revenue projections and big plans, you need somebody who can start business developing. I think you’re better suited to get an operations executive in place that can start laying the groundwork for future organization growth, and then start to bring in additional staff opportunistically with this core role in place. The BD person, like the finance or technology executive, doesn’t provide you with the flexibility you may want depending on how the next set of hires line up…..if you end up finding three great junior engineers next, the operations exec can play product/project manager to that group, whereas you’re going to have to play that role (or worse, try to hire a technology team lead too quickly) if your first experienced hire is the BD executive. Finally, it’s also the case that if you don’t bring in the operations exec early, you probably don’t end up bringing them in until too late, because the needs of specific teams within the organization will quickly start to demand very specific functional leads, and pretty soon you’ve got an org with no structural core and no approach or processes for growth.Notice how this kind of approach also fits in with my Best Available Athlete thinking about hiring. You want your more experienced early hires to be as much like stem cells as possible….able to take on differing roles in the organism depending on where they’re needed if the business or market or hiring experience shifts from expectations.All of these issues are less critical if you’ve got a group of cofounders that can wear multiple hats, but of course, most entrepreneurs don’t find themselves in this situation.NB: it’s also worth pointing out that lots of founders don’t particularly want to be CEO after the company gets to a certain size. Having an operating executive on board early allows you to also evaluate this person as a potential CEO should that opportunity or necessity arise. More on the transition from founder to senior management in a future post.

To use the chart, analysts plot a scatter graph to rank the business units (or products) on the basis of their relative market shares and growth rates.

Cash cows are units with high market share in a slow-growing industry. These units typically generate cash in excess of the amount of cash needed to maintain the business. They are regarded as staid and boring, in a "mature" market, and every corporation would be thrilled to own as many as possible. They are to be "milked" continuously with as little investment as possible, since such investment would be wasted in an industry with low growth.

Dogs, or more charitably called pets, are units with low market share in a mature, slow-growing industry. These units typically "break even", generating barely enough cash to maintain the business's market share. Though owning a break-even unit provides the social benefit of providing jobs and possible synergies that assist other business units, from an accounting point of view such a unit is worthless, not generating cash for the company. They depress a profitable company's return on assets ratio, used by many investors to judge how well a company is being managed. Dogs, it is thought, should be sold off.

Question marks are growing rapidly and thus consume large amounts of cash, but because they have low market shares they do not generate much cash. The result is a large net cash consumption. A question mark (also known as a "problem child") has the potential to gain market share and become a star, and eventually a cash cow when the market growth slows. If the question mark does not succeed in becoming the market leader, then after perhaps years of cash consumption it will degenerate into a dog when the market growth declines. Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share.

Stars are units with a high market share in a fast-growing industry. The hope is that stars become the next cash cows. Sustaining the business unit's market leadership may require extra cash, but this is worthwhile if that's what it takes for the unit to remain a leader. When growth slows, stars become cash cows if they have been able to maintain their category leadership, or they move from brief stardom to dogdom.As a particular industry matures and its growth slows, all business units become either cash cows or dogs.

The overall goal of this ranking was to help corporate analysts decide which of their business units to fund, and how much; and which units to sell. Managers were supposed to gain perspective from this analysis that allowed them to plan with confidence to use money generated by the cash cows to fund the stars and, possibly, the question marks. As the BCG stated in 1970.Only a diversified company with a balanced portfolio can use its strengths to truly capitalize on its growth opportunities.

The balanced portfolio has:stars whose high share and high growth assure the future;cash cows that supply funds for that future growth; andquestion marks to be converted into stars with the added funds.

Monday, October 15, 2007

PDCA ("Plan-Do-Check-Act") is an iterative four-step problem-solving process typically used in quality control. It is also known as the Deming Cycle

PDCA=MeaningPLANEstablish the objectives and processes necessary to deliver results in accordance with the specifications.

DOImplement the processes.CHECKMonitor and evaluate the processes and results against objectives and Specifications and report the outcome.ACTApply actions to the outcome for necessary improvement. This means reviewing all steps (Plan, Do, Check, Act) and modifying the process to improve it before its next implementation.

General principles of root cause analysisAiming corrective measures at root causes is more effective than merely treating the symptoms of a problem.To be effective, RCA must be performed systematically, and conclusions must be backed up by evidence.There is usually more than one root cause for any given problem.General process for performing root cause analysisDefine the problem.Gather data/evidence.Identify issues that contributed to the problem.Find root causes.Develop solution recommendations.Implement the recommendations.Observe the recommended solutions to ensure effectiveness.Root cause analysis techniques5 WhysFailure mode and effects analysisPareto analysisFault tree analysisBayesian inferenceIshikawa diagram, also known as the fishbone diagram or cause and effect diagramBarrier analysis - a technique often used in particularly in process industries. It is based on tracing energy flows, with a focus on barriers to those flows, to identify how and why the barriers did not prevent the energy flows from causing harm.Change analysis - an investigation technique often used for problems or accidents. It is based on comparing a situation that does not exhibit the problem to one that does, in order to identify the changes or differences that might explain why the problem occurred.Causal factor tree analysis - a technique based on displaying causal factors in a tree-structure such that cause-effect dependencies are clearly identified.Basic Elements of Root CauseMaterials Defective Raw MaterialWrong type for jobLack of raw materialMachine/EquipmentIncorrect tool selectionPoor maintenance or designPoor equipment or tool placementDefective Equipment or toolEnvironmentOrderly workplaceJob design or layout of workSurfaces poorly maintainedPhysical demands of the taskForces of NatureManNo or poor management involvementInattention to taskTask hazards not guarded properlyOther (horseplay, inattention....)Stress demandsMethodsNo or poor proceduresPractices are not the same as written proceduresPoor communicationManagement SystemTraining or education lackingPoor employee involvementPoor recognition of hazardPreviously identified hazards were not eliminated

Friday, October 12, 2007

A model to help you think through managing people, Abraham Maslow's "Hierarchy of Needs",This was one of the first theory's I read many years ago and has been with me since, it is a simple model to explain why people do stupid things. I used to say to my line supervisors, keep the production line busy and you will have less trouble to manage, I say the same to directors now. The answer is in the Model.

Maslow's primary contribution to psychology is his Hierarchy of Needs. Maslow contended that humans have a number of needs that are instinctoid, that is, innate. These needs are classified as "conative needs," "cognitive needs," and "aesthetic needs." "Neurotic needs" are included in Maslow's theory but do not exist within the hierarchy.Maslow postulated that needs are arranged in a hierarchy in terms of their potency. Although all needs are instinctive, some are more powerful than others. The lower the need is in the pyramid, the more powerful it is. The higher the need is in the pyramid, the weaker and more distinctly human it is. The lower, or basic, needs on the pyramid are similar to those possessed by non-human animals, but only humans possess the higher needs.The first four layers of the pyramid are what Maslow called "deficiency needs" or "D-needs:" the individual does not feel anything if they are met, but feels anxious if they are not met..... Needs beyond the D-needs are "growth needs," "being values," or "B-needs." When fulfilled, they do not go away; rather, they motivate further.The base of the pyramid is formed by the physiological needs, including the biological requirements for food, water, air, and sleep.Once the physiological needs are met, an individual can concentrate on the second level, the need for safety and security. Included here are the needs for structure, order, security, and predictability.The third level is the need for love and belonging. Included here are the needs for friends and companions, a supportive family, identification with a group, and an intimate relationship.The fourth level is the esteem needs. This group of needs requires both recognition from other people that results in feelings of prestige, acceptance, and status, and self-esteem that results in feelings of adequacy, competence, and confidence. Lack of satisfaction of the esteem needs results in discouragement and feelings of inferiority.Finally, self-actualization sits at the apex of the original pyramid.In 1970 Maslow published a revision to his original 1954 pyramid ([1]), adding the cognitive needs (first the need to acquire knowledge, then the need to understand that knowledge) above the need for self-actualization, and the aesthetic needs (the needs to create and/or experience beauty, balance, structure, etc.) at the top of the pyramid. However, not all versions of Maslow's pyramid include the top two levels.Maslow theorized that unfulfilled cognitive needs can become redirected into neurotic needs. For example, children whose safety needs are not adequately met may grow into adults who compulsively hoard money or possessions (see[2]). Unlike other needs, however, neurotic needs do not promote health or growth if they are satisfied.Maslow also proposed that people who have reached self-actualization will sometimes experience a state he referred to as "transcendence," in which they become aware of not only their own fullest potential, but the fullest potential of human beings at large. He described this transcendence and its characteristics in an essay in the posthumously published The Farther Reaches of Human Nature. (see flow).In the essay, he describes this experience as not always being transitory, but that certain individuals might have ready access to it, and spend more time in this state. He makes a point that these individuals experience not only ecstatic joy, but also profound "cosmic-sadness" (Maslow, 1971) at the ability of humans to foil chances of transcendence in their own lives and in the world at large.Maslow's theory of human needs draws strongly on the pioneering work of Henry Murray (1938). This provides the basis for wide-ranging and extensively validated work relating to achievement, affiliation, power and ambition."We move toward self actualization". This quote brings in Maslow's theory of motivation, tying along with the growth, happiness and satisfaction of every person. He believes to be motivated that it is not driven by reducing tension or avoiding frustration that people look for a positive view.

Thursday, October 11, 2007

Over the next few days I will be giving a short introduction to specific tools for your toolbox, these may not be applicable now but they will be helpful when the "tough get's going", Today's tool, is an concept used in many large scale manufacturing organizations, but can be used just as well in your garage or workshop, office or personal life,

Kaizen (改善, Japanese for "change for the better" or "improvement"; the English translation is "continuous improvement" or "continual improvement").In the context of this article, Kaizen refers to a workplace 'quality' strategy and is often associated with the Toyota Production System and related to various quality-control systems, including methods of W. Edwards Deming.Kaizen aims to eliminate waste (as defined by Joshua Isaac Walters "activities that add cost but do not add value"). It is often the case that this means "to take it apart and put back together in a better way." This is then followed by standardization of this 'better way' with others, through standardized work.

IntroductionKaizen is a daily activity whose purpose goes beyond simple productivity improvement. It is also a process that, when done correctly, humanizes the workplace, eliminates overly hard work (both mental and physical) "muri", and teaches people how to perform experiments on their work using the scientific method and how to learn to spot and eliminate waste in business processes.

To be most effective Kaizen must operate with three principles in place:consider the process and the results (not results-only); systemic thinking of the whole process and not just that immediately in view (i.e. big picture, not solely the narrow view); anda learning, non-judgmental, non-blaming (because blaming is wasteful) approach and intent.People at all levels of an organization participate in kaizen, from the CEO down, as well as external stakeholders when applicable. The format for kaizen can be individual, suggestion system, small group, or large group. In Toyota it is usually a local improvement within a workstation or local area and involves a small group in improving their own work environment and productivity. This group is often guided through the Kaizen process by a line supervisor; sometimes this is the line supervisor's key role.While Kaizen (in Toyota) usually delivers small improvements, the culture of continual aligned small improvements and standardisation yields large results in the form of compound productivity improvement. Hence the English translation of Kaizen can be: "continuous improvement", or "continual improvement."

This philosophy differs from the "command-and-control" improvement programs of the mid-twentieth century. Kaizen methodology includes making changes and monitoring results, then adjusting. Large-scale pre-planning and extensive project scheduling are replaced by smaller experiments, which can be rapidly adapted as new improvements are suggested.ImplementationThe Toyota Production System is known for kaizen, where all line personnel are expected to stop their moving production line in case of any abnormality and, along with their supervisor, suggest an improvement to resolve the abnormality which may initiate a kaizen.

The cycle of kaizen activity can be defined as:

standardize an operation ->

measure the standardized operation (find cycle time and amount of in-process inventory) ->

gauge measurements against requirements ->

innovate to meet requirements and increase productivity ->

standardize the new, improved operations ->

continue cycle ad infinitum.

This is also known as the Shewhart cycle, Deming cycle, or PDCA.Masaaki Imai made the term famous in his book, Kaizen: The Key to Japan's Competitive Success.

Wednesday, October 10, 2007

Failing Fast It's a good thingThe only thing better than a "Yes" is a quick "NO". When you are raising money, selling a customer, or trying to get a deal done, it is the long drawn out process that never ends that will kill you. It is the same thing with startups. Being successful is always the goal, but if it is going to fail...Fail fast.

The traditional model - When I first got involved in the startup world the typical path was to raise several rounds of VC money, take two or three years to develop a product, then raise more money to hire an enterprise sales force and go to market. Sales cycles were typically 9 to 18 months. It could be 5 years before you really knew if the company had a good chance of success.

Today a product can be built in a few weeks or months. Development tools are powerful, easy to use, and cheap. Infrastructure for hosting, storage, and bandwidth are inexpensive, scalable, reliable, and secure. Ten or fifteen years ago each startup built their own infrastructure at a cost of millions of dollars.

Who needs an enterprise sales force? Today you can get directly to your customers on the Internet. There are ready built e-commerce systems that can handle sales, credit cards, fulfillment, and shipping.

The advertising revenue model has created a whole new class of businesses that don't need a sales force. The product or service is free. No customer acquisition cost. The revenues come from advertising and sponsorships.

Double Down or Fold? - All of this amazing technology and infrastructure doesn't guarantee success. Far from it. As Paul Graham says in his post "The Future of Web Startups"

If it gets easier to start a startup, it's easier for competitors too. That doesn't erase the advantage of increased cheapness, however. You're not all playing a zero-sum game. There's not some fixed number of startups that can succeed, regardless of how many are started.

There are more startups than ever before, and more competition. However, the good thing is you will know pretty quickly if your product idea is hot or not. You can get a beta product launched and start getting user feedback within a few months. To use a poker analogy, you can decide very early whether to "double down" or fold.

OK, I have 400,000 users, now what? You might remember a story I did about "Where I've Been", the Facebook App that grew incredibly fast. Lots of users but no business model or revenues. They actually figured it out and are now generating revenues.

Yes doesn't guarantee success, but No avoids wasting time. - So getting to a quick NO is good. Getting user feedback early and often allows you to dump bad ideas early and redeploy onto another better idea. Yes can mean lots of users, but you still need to solve the business/revenue model before declaring victory.

So, next time you get a quick NO, just say thank you, and move on to the next customer, the next deal, or the next idea.

By Don Dodge

He is a veteran of five start-ups including Forte Software, AltaVista, Napster, Bowstreet, and Groove Networks. Don is currently Director of Business Development for Microsoft's Emerging Business Team. The goal is to help VC's and start-ups be successful with Microsoft, and together, provide great products for our customers. He writes a daily blog, Don Dodge on the Next Big Thing.

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I am a 50 year old executive who for the last 30 years has worked in the Hi tech sector ...I have seen the demise of the 64KDRAM..in fact I used to make them...I have seen the cloning of a sheep.... I have worked with multi cultural companies on 5 off the 6 continents .. would love to live on Oz and I could learn to play the didgeridoo...I understand that this ball off mud we live on is one great place... that life is for living... for enjoying...and that we all need a purpose in life...what’s yours ?
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